Losing a partner, parent or caretaker is unfortunate and can be devastating to those left behind, not just emotionally but also financially. This makes it critical to protect your loved ones’ finances even after you do pass away or are diagnosed with a terminal illness.

In comes life insurance, one of the best ways to cushion your dependents from the financial difficulties they may experience following your passing away or incapacitation.

If you’re wondering what this cover is all about, this article is for you! Inside, we look at six key facts that everyone should know about life insurance. Let’s dive straight in!

What is life insurance?

First things first.

Life insurance is a contract between an insurance company and a policyholder, whereby the policyholder or their kin is paid an agreed amount of money in exchange for a premium. The payment is made to the insured upon the departure or incapacitation of the insured person as per the insurance policy contract. 

There are many types of life insurance but in this article, we’ll only look into the three most common ones namely; term insurance, Whole of Life, and family income benefit insurance.

Term life insurance

Term life insurance is the simplest type of insurance cover. As the name implies, it covers you for a specified period and lets you specify how much cover you want. If you pass away within the selected period, the policy will payout. But if you outlive it, the coverage comes to an end and you do not receive any payout.

The whole Life plan 

This policy covers your whole life and your loved ones will receive a payout when you pass away, no matter when that is. In the same vein, the premiums for Whole of Life plans remain the same throughout the contract duration.

In a nutshell, this type of insurance comes with a guaranteed death benefit as long as the insured pays the premiums without fail.

Family income benefit insurance

This type of Insurance policy helps you secure a regular payout to your family when you depart. It’s the perfect plan if you are the sole provider and would like to ensure that there is a continuation of the flow of income even after you’re gone. 

Unlike other forms of insurance where the payout is provided as a lump sum, your family will receive a regular income for a specified period. Family income benefit is widely regarded as the most budget-friendly life insurance available.

life insurance

When should you get life insurance?

When it comes to purchasing an insurance cover, younger is better. The younger you are when you purchase the plan, the lower your premiums are likely to be. If you wait until you are old, you may develop health issues that could disqualify you from getting an affordable insurance plan.

How much does life insurance cost?

The cost of cover will no doubt be a factor when deciding what insurance policy you choose. Life insurance policies will be different for different people. Situations vary and so will insurance policies. Your age, lifestyle, profession, and family medical history are all taken into consideration when an insurer is tailoring a life policy that suits you best. As such, there is no ‘average cost of insurance.’

How often should you review your insurance policy 

It is good practice to review your life insurance policy at least once every year. You should also reach out to your insurance agent if you have any major life changes. This helps to ensure that you explore any new developments that have occurred and possibly get better coverage.

Benefits of getting life insurance

By now, we can all agree that life insurance is important. But if you’re not yet convinced, here are a couple more reasons why it would benefit you to take out a cover today;

For starters, a life insurance plan provides you and your loved ones with much-needed peace of mind. This is because, in the event of your passing on, you are sure that your loved ones will still be provided for and lead comfortable lives.

Your beneficiaries can also use the payout to clear any debts you may have left behind or take care of a mortgage payment.

Are there instances when life insurance does not payout?

Sure. Insurance policies do not always end up in a payout. The most common cause of a failure by an insurer to pay out a life policy is non-disclosure. Concealing information regarding pre-existing medical conditions or lifestyle habits such as smoking or substance abuse would bar you from getting a payout. 

Another reason why your plan could fail to payout is if you missed making your premium payments as per the agreed terms. Finally, policies such as term life do not pay out if death occurs outside the specified period in the policy.

Conclusion

Life Insurance is not just for the wealthy; regardless of how much money you earn, there is an insurance plan for you. With life coverage, your loved ones will get assistance to adjust financially and make ends meet in the event of your passing away. Get yourself covered today and lead a stress-free life!

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